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TMI Blog2015 (1) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... ith impost at 4% per annum - there is no calculation of the value of other goods transferred in the same form, namely, cement, PVC pipes, RCC pipes carrying tax at different rates, as prescribed in the Third Schedule to the KVAT Act, 2003 - assessee did not furnish the tax invoice, the debit note or credit note in relation to sale of the materials transferred in the execution of the works contract, in accordance with Section 29 or 30 of the KVAT Act, 2003. The authorities based upon the RA Bills submitted by the respondent/assessee arrived at ₹ 67,38,377/- as the value of the iron and steel, in respect of which the rate of tax is 4% - the State is not entitled to the illegal duty on 'works contract' for the AY 2005-06, calling forth the application of doctrine of unjust enrichment - the direction issued by the KAT relating to subjecting to tax at the rate of 12.5% on the remaining taxable turnover, relating to goods other than iron and steel cannot be upheld – thus, the portion of the order is set aside which is subjecting to tax at 12.5% on the remaining taxable turnover relating to goods other than iron and steel and direct imposition of tax at the rates prescribed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % on ₹ 85,56,585/- the value of works contract, while allowing a deduction of ₹ 10,69,568/- as VAT collected by order dated 20.08.2007. (e) The Revisional Authority invoking Section 63-A of the KVAT Act, 2003, revised the order passed by the PA by order dated 13.11.2007, Annexure 'B', withdrawing the deduction of ₹ 10,69,568/- and enhanced the taxable turnover to ₹ 96,26,253/- from ₹ 85,56,585/-. (f) Respondent filed a rectification application on 12.12.2007 before the Revisional Authority invoking Section 69(1) of the KVAT Act, 2003 to rectify the order dated 13.11.2007, Annexure 'B', which when considered was rejected by order dated 06.12.2007, Annexure 'C'. (g) Respondent, aggrieved by the aforesaid orders, Annexures 'B' and 'C', filed S.T.A. No.134 of 2008 before the KAT invoking Section 63 of the KVAT Act, 2003. The KAT, by order dated 04.01.2013, Annexure 'D' , allowed the appeal, modified the order dated 06.12.2007 of the Revisional Authority and directed the PA to quantify the turnover of the transfer of property in iron and steel, transferred in the same form in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the learned counsel, the goods iron and steel transferred in the same form for the purpose of execution of the works contract, being declared goods under Section 14 of CST Act, 1956, attract duty at 4%. Learned counsel hastens to add that sub-section (4) of Section 29 of the KVAT Act, 2003 is inapplicable to the respondent/assessee, since the assessment was for the year 2005-06 and while sub-section (4) of Section 29 of the KVAT Act, 2003 was inserted by Act No.6 of 2007 w.e.f 01.04.2007. 7. In addition, learned counsel submits that the Sixth Schedule providing entry No.23, relating to tax at the rate of 12.5% on all other works contracts not specified in the categories mentioned therein, amongst other description of works contracts, was inserted by Act No.4 of 2006 w.e.f. 01.04.2006 and hence, the works contract was not liable to tax for the assessment year 2005-06. 8. Learned counsel for the respondent submits that though there was no impost on works contracts during the assessment year 2005-06, nevertheless, the PA passed an order of reassessment, Annexure 'B', for payment of tax at the rate of 12.5% on the total taxable turnover for the year 2005-06, while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) x x x [(4) Notwithstanding anything contained in sub-section (1) or (3) or sub-section (1) of Section 7, a registered dealer executing civil works contracts shall issue a tax invoice or bill of sale at such time and containing such particulars as may be prescribed.] Sub-section (4) inserted by Act No.6 of 2007, w.e.f. 01.04.2007 (D) Entry No.30 of the Third Schedule to the KVAT Act, 2003, reads thus: [THIRD SCHEUDLE [Section 4(1)(a)(ii)] [GOODS TAXABLE AT FOUR PER CENT Serial Number Description of Goods 30. Declared goods as specified in Section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) Third Schedule substituted by Act No.27 of 2005 and shall be deemed to have come into force w.e.f. 07.06.2005. The heading GOODS TAXABLE AT FOUR PER CENT omitted by Act No.4 of 2010, w.e.f. 01.04.2010. Third Schedule substituted by Act No.27 of 2005 and shall be deemed to have come into force w.e.f. 07.06.2005. The heading GOODS TAXABLE AT FOUR PER CENT omitted by Act No.4 of 2010, w.e.f. 01.04.2010. (E) Section 14(iv)(iv) of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks contract are certified by the authorities of the Jilla Panchayath as recorded in the RA Bills, out of which iron and steel transferred in the same form during the year 2005-06 was ₹ 67,38,377/-, with impost at 4% per annum. Admittedly, there is no calculation of the value of other goods transferred in the same form, namely, cement, PVC pipes, RCC pipes carrying tax at different rates, as prescribed in the Third Schedule to the KVAT Act, 2003. 13. The liability to tax and rates thereof under the charging Section 4(1)(a)(ii) read with entry No.30 in the Third Schedule, relates to the declared goods as specified in Section 14 of the CST Act, 1956, in which, Clause (iv) of sub-section (iv) deals with steel bars from out of iron and steel, is charged to tax at 4%. For the purpose of calculating the amount of net tax payable on the value of the iron and steel, sub-section (4) of Section 10 of the KVAT Act requires the assessee to furnish the tax invoice, debit note or credit note, in relation to sale, issued in accordance with Section 29 or 30, and is with the assessee seeking deduction at the time any return in respect of the sale is furnished. 14. Although Government Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far-fetched for the State and its authorities to have fastened the respondent with the liability to pay tax on the 'works contract' for the assessment year 2005-06. 19. The charging Section 4(1)(c) in respect of transfer of property in goods, whether as goods or in some other form, involved in the execution of works contract specified in column (2) of the Sixth Schedule, subject to Sections 14 and 15 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), at the rates specified in the corresponding entries in column (3) of the said Schedule, was inserted by Act 4 of 2006 w.e.f. 01.04.2006. Thus, for the first time, 'works contract' was imposed with tax at 12.5% w.e.f. 01.04.2006 and not for the assessment year 2005-06. 20. In the view we have taken supra, none of the questions of law, framed by the Revenue in the memorandum of revision petition, arise for decision making. 21. In the circumstances, the Revenue, i.e., the State is not entitled to the illegal duty on 'works contract' for the assessment year 2005-06, calling forth the application of doctrine of unjust enrichment. It is needless to state that when tax is illegally collected, it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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